Luxury home values increased in San Francisco, Los Angeles and San Diego in the third quarter of 2013 compared to a year ago, according to the First Republic Prestige Home Index by First Republic Bank.
In the third quarter of 2013, the Index indicated the following:
- San Francisco Bay Area values climbed 10.4% from the third quarter of 2012 and 1.9% from the second quarter of 2013. The average luxury home in San Francisco is US$3.0 million.
- Los Angeles area values rose 14.0% from the third quarter a year ago and 6.7% from the second quarter of 2013. The average luxury home in Los Angeles is US$2.3 million.
- San Diego area values gained 13.5% year-over-year and 6.0% from the second quarter of 2013. The average luxury home in San Diego is almost US$1.9 million.
Katherine August-deWilde, president and COO of First Republic Bank, said: "Luxury home prices were strong both year-over-year and for the third quarter in San Francisco, Los Angeles and San Diego. Luxury communities in California’s urban coastal areas continue to experience limited inventory and strong demand from U.S. and foreign buyers."
First Republic Bank produces the Prestige Home Index each quarter with Core-Logic Case-Shiller, a leading provider of automated property valuation services and home price metrics to US financial institutions.
Historical results of the Index, which has tracked luxury homes since 1985, are accessible at www.firstrepublic.com. First Republic Bank is an active lender in the luxury home market for primary residences and vacation homes.
The double-digit, year-over-year gain in the region pushed luxury home prices over $3 million in the third quarter. Prices were last at that level in the first quarter of 2008.Steve Mavromihalis of Pacific Union in San Francisco, said: "I’m seeing more investment in luxury homes than any time in my career. Very specifically, it’s driven by location and amenities. Except for an unforeseen event, the real estate market for the best homes in San Francisco may experience a real run up because there is very little inventory. Compared to other world-class cities, San Francisco is still a relative bargain."
In Silicon Valley, the luxury market was at all-time highs.
Anne King of Keller Williams Realty in Palo Alto, said: "Demand continues to be very strong, and our inventory is still lagging. This year, the percentage of all-cash buyers and foreign buyers surpassed last year’s. In Menlo Park and Palo Alto, the median price of a home is over $2.1 million. That says something about this market."
In the Wine Country, prices continued to rise.
Jim Perry of Pacific Union in St. Helena, said: "The luxury market in the Napa Valley is good and steady. The Wine Country is a little different than the Bay Area because it is mostly second homes. The inventory here has been steadily bought down. If you have the right product, it will still sell quickly."
In the third quarter, values on a year-over-year basis increased for the sixth straight quarter and are the highest since the fourth quarter of 2008.
On the West Side of Los Angeles, values were very strong.
Myra Nourmand of Nourmand & Associates in Beverly Hills, said: "The high end of the market was off the charts in the third quarter. There is money coming from outside the country – Europe, Asia and Australia. What’s amazing is that the entry-level home in the flats of Beverly Hills is now $4.5 million. That’s the highest ever. The market has come back way beyond 2006."
In Brentwood, buyer interest remained high.
David Offer of Berkshire Hathaway HomeServices in Brentwood, said: "The market is not quite as frothy as it was in the spring and early summer, but it remains very strong. The pace of appreciation has slowed a bit. There is still limited inventory, but the buyers aren’t feeling the same sense of urgency as they were earlier in the year. They are not as fearful of prices getting away from them."
In the Santa Barbara area, prices continued their upward trend.
Dina Landi of Village Properties Realtors in Montecito, said: "Prices started climbing in the beginning of the year, and we’ve continued to see a steady rise in values. Sales slowed a bit through the fall, but just recently picked up again. Some of the inventory that has been on the market has been scooped up."
With the 13.5% increase year-over-year, luxury home values were the highest since the fourth quarter of 2008.
Chuck Gifford of Coldwell Banker in Rancho Santa Fe, said: "Our market came back in the third quarter. Inventory was very low, which helped prices. We also saw offers that were closer to sellers’ expectations."
On Coronado Island, the summer buying season was strong.
Scott Aurich of Pacific Sotheby’s International Realty on Coronado, said: "We had great demand this summer. High-end properties that had been on the market for a while had multiple offers. There is an increased level of activity in the high-end market, which is very positive."